Skip to content

H1 - do not remove

Agenda and minutes

Venue: Committee Room B12. View directions

Items
Note No. Item

30.

Apologies for Absence.

Minutes:

Apologies for absence were received from Councillor J A Hayes and Councillor A R Lloyd and on behalf of Mrs Liz Jackson of Grant Thornton (due to illness). The Committee wished Mrs Jackson a speedy recovery.

 

The Chairman welcomed Matthew Dean, Engagement Manager, Grant Thornton to the proceedings and thanked the Strategic Director (Internal Services), the Financial Services Manager, the Counter Fraud Manager and the Principal Internal Auditor for their attendance.

 

 

31.

Declarations of Interest.

To receive any declarations of interest from Members including the terms(s) of any Grants of Dispensation.

Minutes:

There were no declarations of interest.

MD

32.

Confirmation of the Minutes of the meeting held on 21 September 2016 pdf icon PDF 127 KB

Minutes:

            RESOLVED:

 

That the Minutes of the Audit Board meeting held on 21 September 2016 be confirmed as accurate.

33.

References from Other Committees (IF ANY)

There are presently no references from other Committees.

Minutes:

There were no references from other Committees for the Board to consider.

34.

External Audit Update pdf icon PDF 44 KB

To present to the Board the Annual Audit Letter 2015/16 and the Audit Update 2016/17 issued by Grant Thornton (attached as Appendices A and B respectively). 

Additional documents:

Minutes:

The covering report from the Financial Services Manager (FSM) presented to the Audit Board for noting, the Annual Audit Letter 2015/16 and the Audit Update 2016/17 document, issued by Grant Thornton UK as the Council’s External Auditors (attached as Appendices A and B respectively to the report).

 

The FSM confirmed, in direct response to a question from the Shadow Leader of the Council, that Appendices A and B did not differ materially to the documents presented by the External Auditor to the Board in September 2016 [Min. No. 23 refers].

 

Members were advised that a draft Audit Plan for 2017/18 would be presented to the next Board in April, with the final Audit Plan 2017/18 document presented to Members at the following Board meeting, due to be held on 28 June 2017.

 

                        RESOLVED:

 

1.    That Audit Board Members note the contents of the Annual Audit Letter [attached as Appendix A to the report] issued by Grant Thornton UK as External Auditors for the Council, which confirmed an ‘Unqualified Opinion’ on both the Council’s Financial Statements for 2015/16 and the ‘Value for Money Conclusion’ for the Council’s use of resources during the year ended 31 March 2016 [as initially advised to the Board on 21 September 2016 - Min. No. 23 refers];

 

2.    That Board Members note the contents of the Audit Update 2016/17 report from Grant Thornton [attached as Appendix B to the report].

35.

External Audit - Certification Work Report 2015/16 pdf icon PDF 46 KB

To note the contents of the External Auditor’s 2015/16 Certification Letter, attached as Appendix A to the report.

 

Additional documents:

Minutes:

The report from the Financial Services Manager submitted for consideration by the Board, the External Auditor’s 2015/16 Certification Letter (attached as Appendix A to the report) which covered the work undertaken by Grant Thornton to certify the Council’s Housing Benefit subsidy claim to the Department for Works and Pensions (DWP) for the year ended 31 March 2016.

 

Matthew Dean, Engagement Manager, Grant Thornton advised Members that the External Auditors had certified the Council’s Housing Subsidy (HB) claim for the financial year 2015/16.

 

However, certain issues had arisen from the certification work undertaken and as a consequence; the External Auditor had been required to issue a Qualification Letter to the DWP on 29 November 2016 regarding the Council's 2015/16 HB subsidy claim. The Letter recorded errors that had been identified either from initial testing of the Council’s 2015/16 claim or from issues identified in the claim for the prior year [2014/15]. In particular, Grant Thornton had identified errors when testing the calculations of claimant’s Self Employed Income by Council staff. Those errors had generated a large extrapolation figure under the HB COUNT Methodology which, as matters stood, would result in the DWP reclaiming Housing Benefit subsidy from the Council for the period under review.

 

It was proposed that the Council now write formally to the DWP requesting that the Council and Grant Thornton [as External Auditor] perform additional work on the Council’s 2015/16 HB claim in a bid to reduce the size of the extrapolation figure and consequent amount of subsidy the DWP could reclaim from the Council. The further work proposed by Grant Thornton would impact on the level of the External Auditor’s final fee for 2015/16, which was now likely to exceed the prior year’s final cost figure of £25,980.

 

In concluding his comments to Board Members the Engagement Manager stressed that the Council was not unique in having its Housing Benefit subsidy claim to the DWP subject to a Qualification Letter from its External Auditor. He advised that the majority of Councils in England had received similar Qualification Letters from their External Auditors in the period under review. Guidance from the DWP to local authorities on the compilation of Housing Benefit subsidy claims had been deficient in recent years, with the Department concentrating on the roll-out and implementation of the Single Universal Credit.  Board Members were asked to note that Council Officers aided by Grant Thornton had identified past errors and were now taking steps to rectify matters going forward.

 

In response to specific questions from the Shadow Leader of the Council and the Vice-Chairman of the Board, the Engagement Manager and Officers confirmed the following points:

 

·         The additional work proposed on the Council’s 2015/16 HB subsidy claim would be concluded by Council Officers and Grant Thornton in the coming months, with a possible update report to the April Board, and a full final report proposed for the June 2017 Audit Board.

 

·         The large extrapolation figure for the (mis)calculation of Self Employed Income for claimants calculated under the  ...  view the full minutes text for item 35.

36.

Counter Fraud Team Update Report pdf icon PDF 84 KB

This report provides Board Members with details of the work carried out by the new Counter Fraud Team from 1 February 2016, following the transfer of Housing Benefit fraud work to the Department for Work & Pensions (DWP) in January 2016.

 

Minutes:

The report provided the Board with an Update Report [attached as Appendix A] on the work carried out by the new Counter Fraud Team created on 1 February 2016 following the transfer of Housing Benefit fraud work to the Department for Work & Pensions’ (DWP’s) Single Fraud Investigation Service.

 

The report reprised for Board Members, the impact and implications for local authorities following publication in March 2016 of the Government’s Local Government Counter Fraud Strategy 2016-2019 document. The Government’s Strategy document advised that local authorities faced a significant fraud challenge which, if not addressed, could directly affect funding for vital frontline services including for the most vulnerable and needy groups in society. Local authorities were asked to adopt an ‘invest to save’ strategy designed to prevent and detect fraud loss, bring perpetrators to account more efficiently and quickly and improve the recovery of losses.

 

The Council had conducted a thorough review of its anti-fraud service following publication of the Government’s new Counter Fraud Strategy and created a new Counter Fraud Team located within the joint Revenues and Benefits Section based in the Sevenoaks’ District Council offices.

 

The Counter Fraud Manager (CFM) highlighted the following points for Members from his Update Report [attached as Appendix A to the covering report]:

 

·         External funding had been successfully negotiated from the Council Tax major preceptors for a further 2 years for anti-fraud work by the Team, dependent upon results achieved;

 

·         Part of the funding had been utilised to purchase the latest credit referencing technology which in the previous 3 months to January 2017 had started to assist the Team in identifying fraud and error within the Council’s existing systems;

 

·         From December 2016 the Team had become a fully signed–up member of the Kent Fraud Hub which had enabled it to start matching data with all Kent local authorities to better locate fraud and error;

 

·         Recently approved policies and procedures would allow the Team to issue penalties and to prosecute persons who had been found to have abused existing discounts and exemption schemes;

 

·         The Team had established an excellent rapport with front-line Revenues staff in the 11 months under review, with the latter now better able to detect and refer ‘suspicious’ claims for discounts and exemptions to the [Counter Fraud] Team for investigation, allowing Revenue staff to concentrate on collecting taxes and providing an enhanced service to the public;

 

·         Actual loss to the Council in the period under review regarding Single Person Discount and Council Tax Exemption was set out in table format in the Update Report [Appendix A, para 4, Agenda p.52]. The table also set-out the significant projected losses the Council would have suffered had the Team not identified the original fraud.

 

In response to specific questions from Board Members the CFM confirmed the following points;

 

·         Data matching within the Kent Fraud Hub was the Team’s current priority, possible expansion of data matching with adjacent Metropolitan local authorities or across England was a consideration for the future;

·         The Council Tax major preceptors had provided  ...  view the full minutes text for item 36.

37.

Progress Report on Internal Audit Plan 2016/17 pdf icon PDF 53 KB

This report provides Members of the Board with information regarding the progress of the Internal Audit Team in delivering the Annual Internal Audit Plan 2016/17.

 

Additional documents:

Minutes:

This report provided Members with information regarding the progress of the Internal Audit Team in delivering the Annual Internal Audit Plan 2016/17.

 

The Principal Internal Auditor referred Board Members to Appendix A to the report [agenda p.59] and advised that further progress had been achieved since the report’s publication. Ten (10) audits had now reached Final report Issued stage, four (4) were at the feedback stage and five (5) remained Reserved for possible cancellation or deferment to 2017/18.

 

Following a staff resignation some thirty-five (35) working days had been lost. However, recruitment of an experienced agency worker [who had previously worked in the Council’s Internal Audit Team] should help to get the 2016/17 Audit Plan back on schedule. It was also proposed to allocate more specific ‘audit follow-up days’ in the Audit Plan for 2017/18.

 

The Chairman advised Board Members that, for the future, he had asked Internal Audit to separate out the audit days made available for ‘Systems Advice’ from days allocated to ‘Selective Invoice Checks’ [Appendix B, agenda p.60 refers].

 

RESOLVED:

 

1.    That Board Members note the contents of the report and the progress made against the 2016/17 Annual Audit Plan to date;

 

2.    That Members approve the amendments made to the Annual Audit Plan 2016/17.

 

38.

Review of Internal Audit Recommendations - Progress Report pdf icon PDF 49 KB

This report is to update Members on progress of the implementation of recommendations agreed with Management during this year, and to report on outstanding recommendations due for implementation by 30 November 2016.

Additional documents:

Minutes:

The report updated Board Members on progress of the implementation of recommendations agreed with Management during the year and reported on outstanding recommendations that had been due for implementation by November 2016.

 

The Principal Internal Auditor (PIA) confirmed the standard format of the report and advised Members that the ‘Overdue’ recommendations listed in Appendix B to the report, would be addressed by Internal Audit in the coming months, with specific ‘Follow-Up’ days allocated for such action in the 2017/18 Audit Plan.

 

The Vice-Chairman expressed his continued concern over the long overdue completion of the audit of IT Security 2013/14 [Appendix A, agenda p.63 and Appendix B agenda pages 65/66]. He noted that the final audit report was dated 22 July 2014 and that Appendix B to the current report advised that further work was still required to complete this audit.

 

He expressed particular concern over the possible damage to the Council’s image and reputation in the eyes of the public, given that resolution of the audit recommendations had begun in 2014 and were still marked as ‘Overdue’  in January 2017. He requested a finite timescale for the final resolution of the IT Security 2013/14 audit.

 

The Strategic Director (Internal Services) advised the Board that significant progress had been made on formulating the underlying and supporting policies for IT Security, but that further work was now required to pull the various strands together into a comprehensive IT Security Policy document for the Council. It was hoped that further progress would be reported to the Board in June 2017, including appropriate wording for public consumption.

 

The PIA advised Members that the audit on ‘Channel Shift 2016/17’ addressed the need for the Council to institute better and faster ways of communicating with the public and other bodies by means of a ‘Channel Shift’ which meant changing the medium of communicating externally from traditional methods e.g. by letter or telephone, to email or via the Council’s public website.

 

                        RESOLVED:

 

1.    That Board Members note the reasons for delayed implementation of audit recommendations as set out in Appendix B to the report;

 

2.    That Members endorse the revised dates provided by Management for implementation of outstanding audit recommendations as set out in Appendix B to the report.

39.

Audit Reports Issued Since Last Meeting of the Board pdf icon PDF 57 KB

This report is to inform Audit Board Members of the outcomes of the audits completed since the previous report to the Board on 21 September 2016 and to provide Members with the opportunity to request clarification or further information, if considered necessary.

Additional documents:

Minutes:

This report (and attached Appendices A – E) informed the Board of the outcomes of the audits completed since the previous report to the Board on 21 September 2016 and gave Members the opportunity to request clarification or further information as deemed necessary.

 

The Chairman repeated his request [Min. No. 38 refers] for greater clarity, both for the public and Members regarding the ‘Channel Shift 2016/17’ audit [Appendix B agenda pages 85/86]. What was ‘Channel Shift’ what did it mean in essence - the audit papers needed to be written in language that a layperson (including Councillors) could understand.

 

The Principal Internal Auditor undertook to address the Chairman’s request in future ‘Channel Shift’ papers presented to the Board.

 

 

                        RESOLVED:

 

1.    That Audit Board Members note the contents of the report.

 

40.

Selective Invoice Checks pdf icon PDF 61 KB

During the September 2016 meeting of the Board, Members selected five (5) creditor payments for checking. This report summarises the findings of that exercise and provides the opportunity for Members to select further payments for audit checking.

Minutes:

At the last meeting of the Audit Board on 21 September 2016 Board Members selected five (5) creditor payments for checking. The report advised Members of the outcome of that exercise.

 

The results of the Internal Audit review of the selected creditor invoices confirmed that all spend decisions made were appropriate and in compliance with Council procedures.

 

Members were invited to select five (5) further creditor payments for examination by the Internal Audit Team and subsequent reporting to the Board in April 2017.

 

                        RESOLVED:

 

1.    That Board Members note the contents of the report;

 

2.    That five (5) further creditor payments be selected by Board Members for checking by Internal Audit and the outcome reported to the Board in April 2017.

 

 

41.

Future Appointment of External Auditors pdf icon PDF 76 KB

This report provides an update on the arrangements for appointing external auditors following the decision of the General Assembly of the Council on 12 December 2016 to opt in to the sector-led procurement approach.

 

Minutes:

The report updated Board Members on the arrangements for appointing external auditors to the Council following the decision by the General Assembly of the Council (GAC) on 12 December 2016 [GA Min. No. 71 refers] to opt-in to the sector-led procurement approach. The present transitional arrangements with Grant Thornton UK were due to end at the conclusion of the 2017/18 audits process.

 

The Strategic Director (Internal Services) advised Board Members that, following approval by the GAC in December 2016, the timetable for the appointment of new external auditors would be as summarised in paragraph 3.10 of the report (agenda p.98).

 

The next step in that process would be to award a procurement contract and set a fee. The sector-led approach to securing an internal auditor appointment would produce economies of scale in relation to fees and was being followed by the vast majority of local authorities, including all districts in Kent.

 

The Engagement Manager, Grant Thornton advised Board Members that some 85% of local authorities in England were adopting the sector-led approach for the appointment of external auditors’ post 2017/18.

 

                       

                        RESOLVED:

 

1.    That Board Members note the next steps in the process of appointing external auditors post 2017/18 and the end of the present transitional arrangements as set out in the report.

 

42.

Whistleblowing Policy Update 2016 pdf icon PDF 58 KB

The Council’s Whistleblowing Policy is subject to annual review by the Audit Board as the appropriate Committee.

 

This report sets out the proposed amendments to the Council’s existing Whistleblowing Policy as approved by the Board in January 2015 [Min. No. 42 refers]. The report has taken into consideration the views of users of the Policy.

Additional documents:

Minutes:

This update report set out the proposed changes to the Council’s current Whistleblowing Policy (attached as Appendix A to the report) which had been approved by the Audit Board in January 2015 and made subject to annual review [Policy Section 8 refers].

 

The Principal Internal Auditor advised Board Members that the proposed changes set out in paragraph 3.7 of the update report [agenda p. 102] had been approved by the Senior Management Team.

 

                        RESOLVED:

 

1.    That Board Members approve the proposed amendments to the Council’s Whistleblowing Policy as set out in Appendix A to the report.

 

 

43.

Strategic Risk Register pdf icon PDF 45 KB

This report presents the latest Strategic Risk Register which highlights the strategic risks facing the Council and the mitigations in place to manage those risks.

 

Additional documents:

Minutes:

The report presented the latest Strategic Risk Register (attached as Appendix A) which highlighted the strategic risks facing the Council and the mitigations in place to manage those risks and their potential to impact on the delivery of Corporate Plan objectives.

 

The Strategic Director (Internal Services) advised Board Members that the Strategic Risk Register (SRR) attached as Appendix A to the report was the latest version of the document and replaced the SRR document presented to the Board in January 2016 [Min. No. 45 refers].

 

The current Register had been updated to reflect the potential impact of Brexit and other emerging risks following new legislation or policies. The Register had been approved by the Senior Management Team, who would undertake further reviews of the Register on a half-yearly basis, to ensure it continued to reflect a changing environment and that the identified risks remained relevant.

 

The Chairman observed that there was no element to denote the ‘movement’ of risk in the current composite matrix of red, yellow and green squares (reflecting a traffic-light system) plus a white dot, placed within the matrix of coloured squares to denote the current status for Risk in each Corporate Objective listed in the Register.

 

He asked Officers to consider adding a coloured dot to the current matrix, to indicate the ‘movement’ of Risk for each Objective i.e. whether risk was increasing or decreasing, in relation to the white dot which indicated the current Risk status for each Objective.

 

Officers agreed to consider the Chairman’s suggestion to record ‘movements’ in Risk for all Corporate Objectives listed in the Strategic Risk Register.

 

In answer to a specific question from the Shadow Leader of the Council, the Strategic Director (Internal Services) advised that the target audience for the Strategic Risk Register was the Internal Audit Team [to compile the Annual Audit Plan] and all Council Managers [to help compile their individual Operational Risk Registers]. Managers had to be aware at all times of the strategic risks facing the Council and take active steps to mitigate those risks where possible.

 

The Shadow Leader asked whether the Register was considered by Cabinet or by the Policy Overview Committee (POC). He understood that the POC considered the Performance Indicators [for each Corporative Objective] and wondered whether that Committee should not therefore also consider the Register; particularly regarding any significant ‘movement’ of Risk in relation to individual Corporate Objectives.

 

He also saw a need for individual Cabinet Members to attend POC and the Audit Board, when Corporate Objectives [within their Portfolios of responsibility] became subject to significant increases in risk, as denoted by the Indicators.

The Vice-Chairman supported the Shadow Leader in his views for greater scrutiny of the risks relating to Corporate Objectives by the Audit Board and the need to formally link that scrutiny activity to Cabinet for action.

 

The Shadow Leader suggested that Cabinet as a body, needed to be made formally aware of any increases in risk affecting individual Corporate Objectives as recorded in the Strategic Risk  ...  view the full minutes text for item 43.

44.

Declarations of Disclosable Pecuniary and Prejudicial Interests pdf icon PDF 69 KB

To note the declarations of disclosable pecuniary and prejudicial interests made by Members in accordance with Standing Order 19 for the period 1 January 2016 to 31 December 2016.

 

Minutes:

The report listed all declarations of disclosable pecuniary and prejudicial interests made by Members in accordance with Standing Order 19 for the period 1 January 2016 to 31 December 2016.

 

                        RESOLVED:

 

1.    That Audit Board Members note the declarations of disclosable pecuniary interests and prejudicial interests made by Members of the Council in accordance with Standing Order 19, since the last report to the Board on 13 January 2016.

45.

CIPFA Training Workshop

To receive proposals from the Strategic Director (Internal Services) for Board Members to participate in a CIPFA (Chartered Institute of Public Finance & Accountancy) training Workshop, together with Members from Sevenoaks Council’s Audit Committee.

Minutes:

The Strategic Director (Internal Services) outlined for Board Members, proposals for a joint training workshop with Members of Sevenoaks Audit Committee to be held either at the Civic Centre in Dartford or at Sevenoaks District Council offices.

 

Specific proposals were for a three hour evening workshop split into 4 sessions of 40 minute slots, to receive CIPFA (Chartered Institute of Public Finance and Accountancy) training on:

 

·         A case study of an Internal Audit report;

·         Role of Members on an Audit Board / Committee;

·         Risk;

·         Fraud and Corruption

 

Members welcomed the proposals and requested that:

 

(i)            The IA Case study include examples of a ‘bad’ IA report (with points to avoid) as well as what constituted a ‘good’ IA report;

 

(ii)          The ‘Role of Members’ session include examples of what constituted an ‘effective’ Audit Board / Committee

 

Members also expressed a preference to be trained at the Civic Centre in Dartford if at all possible.

 

The SD (IS) welcomed the positive feedback from Members and noted their comments and preferences. She undertook to take matters forward with her Sevenoaks counter-part and advise Members of developments in due course.